Land Law Notes
EXCLUSIVE POSSESSION
- Doctrinally distinct from an easement
NB Although the landlord cedes physical possession to the tenant, the landlord is treated
as retaining possession under the Law of Property Act 1925, s 205(1)(xix), which defines
possession as ‘include[ing] receipt of rents and profits or the right to receive the same, if
any’. This means that a freeholder landlord retains his legal ‘fee simple absolute in
possession’ upon leasing the land.
1. Where no grant of exclusive possession, lawful occupier is necessarily a licensee
Note, however, that the converse is not necessarily true: that an occupier has
exclusive possession is not, by itself, conclusive as to the existence of a lease.
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2. The doctrinal test of exclusive possession
Street v Mountford [1985] AC 809 (HL)
“The tenant possessing exclusive possession is able to exercise the rights of an
owner of land, which is in the real sense his land albeit temporarily and subject to
certain restrictions. A tenant armed with exclusive possession can keep out
strangers and keep out the landlord unless the landlord is exercising limited rights
reserved to him by the tenancy agreement to enter and view and repair.” (Lord
Templeman, p 816)
Street v Mountford [1985] AC 809 (HL)
“An occupier of residential accommodation at a rent for a term is either a lodger
or a tenant. The occupier is a lodger if the landlord provides attendance or
services which require the landlord or his servants to exercise unrestricted access
to and use of the premises. A lodger is entitled to live in the premises but cannot
call the place his own.” (Lord Templeman, pp 817-818)
Aslan v Murphy; Duke v Wynne [1990] 1 WLR 766 (CA)
“Exclusive or non-exclusive occupation …This is the touchstone by which the
‘spade’ of tenancy falls to be distinguished from the ‘fork’ of lodging. … But there
is a spectrum of exclusivity ranging from the occupier of a detached property
under a full repairing lease, who is without doubt a tenant, to the overnight
occupier of a hotel bedroom who, however up-market the hotel, is without doubt
a lodger. The dividing line — the sorting of the forks from the spades — will not
necessarily or even usually depend upon a single factor, but upon a combination
of factors.” (Lord Donaldson MR)
First, note that although under a lease a landlord cedes physical possession to the tenant, the
landlord is treated as retaining possession under s.205(1)(xix) LPA 1925, which defines possession
as including ‘receipt of rents and profits or the right to receive the same, if any’. This means that,
that notwithstanding the existence of a lease, a freeholder landlord retains his legal ‘fee simple
absolute in possession’ upon leasing the land.
In theory, exclusive possession is characterised as follows:
Tenant can exercise the rights of an owner of land, albeit temporarily and subject to certain
restrictions. Tenants can keep out strangers and the landlord unless the landlord is exercising
limited rights reserved to him by the agreement to enter and view and repair. (Street v
Mountford)
The occupier is a lodger (licensee) if the landlord provides attendance or services which
require the landlord or his servants to exercise unrestricted access to and use of the premises.
A lodger is entitled to live in the premises but cannot call the place his own. (Street v
Mountford)
there is a spectrum of exclusivity ranging from the occupier of a detached property under a
full repairing lease, who is without doubt a tenant, to the overnight occupier of a hotel
bedroom who, however up-market the hotel, is without doubt a lodger. The dividing line will
not necessarily or even usually depend upon a single factor, but upon a combination of
factors. (Aslan v Murphy)
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Downloaded by lovely belugas (vimmanto@gmail.com)Exclusive possession in practice
We can examine this with reference to: (i) services provided by the landlord; (ii) the reservation of
a right of re-entry; (iii) restrictions on the use of the property; (iv) the reservation of a right to
introduce another occupier.
(A) Services provided by the landlord
If the parties agreement allows the landlord to enter the land to provide assistance or services to
the occupier, the more likely it is that exclusive possession will not have been conferred, and it is a
licence, not a lease. As such, when you stay in a hotel room that is a mere licence (see Lord
Donaldson in Aslan v Murphy above), college student rooms are normally a licence owing to the
services provided.
Row of terrace houses was run as homeless persons hostel (temporary
accommodation for homeless), with warden on site and social workers
present. Occupants were granted rooms under “licences”, told (1) that their
rooms may be reallocated; (2) that they may be asked to share; (3) they
had to be in their rooms by 11pm; (4) the council could enter at any time to
supervise and assist. This was held to be a licence mainly because of (4).
Westminster City
Council v Clarke
Man in old people’s home had a licence over his room owing to the care
received including the provision of meals and cleaning services.
Abbeyfield
(Harpenden) Society
Ltd v Woods
House owned by husband and wife, husband ran a business in one of the
rooms. Husband died, wife allowed another person in the same trade to
take over the husband’s business and continue working from the same
space. Agreement allowed wife to enter clean and inspect the room, new
occupant paid her a separate sum for the cleaning.
Vandersteen v Agius
Here, there was a lease – the services provided were ancillary to the
occupation agreement, provided under a separate agreement (not because
she was the landlord).
(B) Reservation of a right of re-entry
What is the impact on exclusive possession if a landlord has, in the alleged lease, expressly
reserved the right to re-enter the premises, or has retained the keys to the property? The answer
depends on why the right has been reserved / keys retained.
If right reserved to allow landlord to enter whenever he wants, e.g. to provide services, then it is
more likely to be a licence. If it is to enter for normal viewing or repair, then the retention of the
right is consistent with the grant of exclusive possession.
There was a lease where the housing association granted a ‘licence’, but
the key was retained merely for repairs.
Family Housing
Association v Jones
It is not a requirement of a tenancy that the occupier shall have exclusive
possession of the keys to the property. What matters is what underlies the
provisions as to keys. A landlord may well need a key in order that he may
be able to enter quickly in the event of emergency: fire, burst pipes, etc., or
to enable him to read meters or to do repairs which are his responsibility.
Aslan v Murphy
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None of these underlying reasons would of themselves indicate that the
true bargain between the parties was such that the occupier was in law a
lodger (licensee).
On the other hand, if the true bargain is that the owner will provide
genuine services which can only be provided by having keys, such as
frequent cleaning, daily bed-making, the provision of clean linen at regular
intervals and the like, there are materials from which it is possible to infer
that the occupier is a lodger rather than a tenant. But the inference arises
not from the provisions as to keys, but from the reason why those
provisions formed part of the bargain.
(C) Restrictions on the use of the property
It is very common for leases to restrict some use (e.g. residential lease restricting use for business,
or business leases restricting use for residential purposes). The question is a matter of degree.
Occasionally, use restrictions are so extensive that exclusive possession is not granted. Instead, all
that was granted is a type of use and involves a licence (i.e. permission to use the land for that
type of use).
(D) Reservation of a right to introduce another occupier
If, and only if, such a clause is genuine, then it can prevent exclusive possession from being
granted. Where it is genuine, it means that the landlord retains some control over the use of the
property (see section below on shams and pretences).
Agreement allowed owner to permit others to use the site, it hence did not
involve a grant of exclusive possession.
AG Securities v
Vaughan
Shams and pretences
Where a clause in the contract purports to remove exclusive possession (e.g. saying that the
landlord reserves the right to permit others to use the property), it might be just a tool to prevent
the contract from being a lease (and hence benefiting from certain forms of statutory protection).
However, the Courts have held that where such clauses are mere pretences (i.e. not meant to be
acted upon genuinely, and there merely to work around the agreement being classed as a lease),
they would look at the substance of the agreement and recognise a lease accordingly.
Per Lord Templeman in AG Securities: “It would have been more accurate and less liable to give
rise to misunderstandings if I had substituted the word ‘pretence’ for the references to ‘sham
devices’ and ‘artificial transactions’”.
Bright ‘Avoiding Tenancy Legislation: Sham and Contracting Out Revisited’ [2002] CLJ 146, p 152
“in moving away from the language of sham to pretence there is the chance to introduce greater
flexibility. Essentially, pretence will be found where there is no genuine intention to implement
the agreement as it stands. This can also be said of sham, but there are not the same constraints
about the need for a common intention and for the whole document to be a lie”
LORD OLIVER “Though subsequent conduct is irrelevant as an aid to
construction, it is admissible as evidence on the question of whether the
documents were or were not genuine documents giving effect to the
parties' true intentions.”
AG Securities v
Vaughan
‘Licence agreement’ for a flat, one of the clauses required that the Crancour Ltd v Da
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possessions when instructed to, and the landlord could remove the
occupier’s belongings whenever he wanted to(i.e. clauses aimed at
restricting the use of the property, in a bid not to grant exclusive
possession). Although it did not need to reach an absolute decision, CA
held that these were arguably shams never intended to be acted upon.
Silvaesa
One bedroom flat, which was let to a couple with a double bed. Agreement
referred to couple as licensees, and also said that they were to use the flat
in common with the licensor and anyone else introduced to live there by
the licensor. The licensor made the two sign separate agreements on the
same day. Here, the Court held that it would read the two agreements
together as they were clearly intended to be interdependent. Moreover,
the Court held that the owner never intended to share occupation or to
authorise someone else to share occupation as the house was far too
small. The clauses were a pretence and it was therefore a lease.
Antioniades v
Villiers
One bedroom basement flat, let to occupier under an agreement described
as a licence, requiring the occupier to vacate between 1030am and noon.
Owner also reserved the right to force the occupier to share with others.
The two clauses were pretences and should be ignored. The agreement did
grant exclusive possession and it was a lease.
Aslan v Murphy
The landlords here artificially tried to create a licence which was in reality a
lease. Regarding one room, the terms of agreement described this as a
“membership club” which provided for various fees. Agreement referred to
licence to occupy club property subject to availability. No exclusive
possession purported to be granted, but club members were permitted to
secure occupied bedrooms by securing the room with a padlock. She did
lock her room. With no notice, the landlord entered the room and disposed
of all her belongings. The issue as to the lawfulness of the repossession
turned on whether she was a tenant. Held: she had exclusive possession of
her room, and she was hence a tenant.
Del Rio Sanchez v
Simple Properties
Management Ltd
The agreements in question were termed ‘licences’, and there was
agreement to provide services. Everything in the agreement was genuine
and was hence upheld as a licence.
Westminster City
Council v Clarke
Old people’s home was owned by the council who engaged Camelot to
engage property guardians to look after the property. Occupier was one of
those guardians, who entered into a guardiancy agreement with Camelot.
The agreement was termed a licence, and did not purport to grant any
particular space to any particular guardian. Said the Camelot could alter the
space at any time. Occupier was offered a choice of available rooms, and
had two rooms. He was given a key to the building and a key to those two
rooms. In three years, he was not asked to move rooms. Held by the court
that in substance, the arrangement in issue conferred exclusive possession
despite being called a licence.
Camelot Property
Management Ltd v
Roynon
Office space was owned by local council, who contracted with Camelot to
provide property guardians, and Camelot appointed the occupier as one
such guardian. Terms of the agreement made it clear that there was no
grant of exclusive possession, but it was said that there would always be
Camelot Guardian
Management Ltd v
Khoo
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space for at least one room per person. Agreement also cited AG Securities,
and said that this would not create a tenancy and was just a licence.
Court held that the property guardian set up would only work if the owner
could recover vacant possession at short notice, which would have required
there to be a mere licence. The commercial purpose of the transaction
would be undermined if the words were to be given a strained meaning,
and there was no pretence involved here.
Global 100 Ltd v Laleva [2021] EWCA Civ 1835
“[T]he very purpose of the arrangement between NHS Property Services and GGM was so that the
latter could provide guardian services to the former. It was essential, in order to fulfil that purpose,
that GGM should be able to hand back the Property as and when NHS Property Services required
it. There is no basis on which it could successfully be argued that the arrangement between NHS
Property Services and GGM was a sham (even if such an allegation had been pleaded).” (Lewison
LJ, [56])
Bevan, ‘Property guardianship: re-visiting the lease/licence distinction and re-shaping the
regulatory landscape of occupational rights in English property law’ (2023) 139 LQR 79, p 84
Sheldon, ‘Property guardians: the lease-licence battleground and the need for reform’ 2023 [Conv]
371
Weight given to the parties choice of label
Courts are willing to place more weight to the label the parties attach to the agreement in
commercial settings, partly because the parties tend to be at an equal bargaining position, so the
tenant does not need the court’s intervention (National Car Parks v Trinity Development Company;
Clear Channel UK v Manchester City Council).
In contrast, if there is inequality of bargaining power (e.g. company landlord and private person
tenant), the court will put less weight on the party’s choice of label.
The ‘role’ of the landlord
There is the increasing indication that the function of the landlord might be playing an increasing
role in the decision, especially if the landlord can only fulfil their role by granting a licence.
AG Securities v Vaughan; Antoniades v Villiers [1990] 1 AC 417 (HL)
“In considering one or more documents for the purpose of deciding whether a tenancy has been
created, the court must consider the surrounding circumstances including any relationship
between the prospective occupiers, the course of negotiations and the nature and extent of the
accommodation and the intended and actual mode of occupation of the accommodation.” (Lord
Templeman, p 458)
if the tenants had leases.
guardianship for occupiers to have leases.
It would have been substantially more difficult for council to run the hostel
Westminster City
Council v Clarke
Finding that the property guardians had licences, was because it would
have been inconsistent with the commercial purposes of property
Camelot Guardian
Management Ltd v
Khoo
Property held by charitable trustees to be used to provide occupation to
poor single women, terms of the agreement themselves pointed away from
Watts v Stewart
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it involving a tenancy and the grant of exclusive possession. There was not
artifice involved, partly because the trustees could not discharge the duties
of the charity if they granted leases. They needed to be able to respond to
people’s needs and revoke licenses. It is hence clear that the status and
role of the landlords as charitable trustees were important in this finding.
Multiple Occupancy
Where there are multiple occupants in a property, there are three possible outcomes:
(i) A lease is granted to each occupier (in respect of each individual room)
(ii) A lease is granted to all occupiers (in respect of the whole of the property) (i.e. a joint
tenancy)
a. Antoniades v Villiers – see above for facts, the outcome was that there was a JT
(iii) The occupiers are merely licensees
a. AG Securities v Vaughan – four bedrooms rented out separately, sharing of communal
space. Each agreement was separate, and each time a room became vacant, the
landlord retained the right to fill the vacancy, although existing tenants could swap
rooms if they wanted (hence it could not be (i)); question between (ii) and (iii). Held
that there were four separate licenses – for a JT, exclusive possession needed to be
granted jointly (i.e. when one left, the other three regained control of that one room –
not the landlord). Also, no unity of interest ( the three would have needed to pay the
whole sum of rent if that one person left). There was no pretence, and so the
occupiers were just merely licensees.
b. Mikeover v Brady – couple, signing separate but identical ‘licence’ agreements on the
same day. Woman moved out and husband paid half the rent. Here, there was no
unity of interest – the couple needed to be in substance liable for the whole rent. But
since the husband only paid half the rent, this was just two licences.
CRITERIA 2 – THE TERM REQUIREMENT
Terminology note:
If the term commences immediately – the lease takes effect ‘in possession’
If the commencement of the term is deferred – the lease takes effect ‘in reversion’
Requirement of Certainty
It has long been a rule in English law that the term of a lease must be certain.
A term created by a leasehold tenancy agreement must be expressed either
with certainty and specifically or by reference to something which can, at
the time when the lease takes effect, be looked to as a certain
ascertainment of what the term is meant to be.
Here, agreement to lease a house during WW2 for the duration of the war
was too uncertain.
Lace v Chantler
Agreement stated that ‘tenancy shall continue until the land is required by
the council for the widening of the road’. The HL confirmed that the rule
requiring certainty of end term, and the original lease on those terms was
void. The HL found a periodic tenancy instead, but this could be terminated
Prudential
Assurance Co Ltd v
London Residuary
Body
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Ratio of Prudential Assurance: a tenancy without a fixed maximum term,
or a periodic tenancy with a fetter of uncertain duration, is void even where
this plainly violates any reasonable assessment of the parties’ intentions.
Owner could no longer pay mortgage, so mortgage company bought the
house and purported to lease it back to her. There was no end date, and it
just said that the lease would end on certain specific grounds, including
that the landlord could terminate if rent was not paid for 21 days. On the
facts, the termination clause had not been triggered, but the landlord
purported to terminate it, claiming that the lease as agreed was void for
uncertainty. Very reluctantly, the SC agreed. However, they managed to find
for the tenant by another route.
Berrisford (FC) v
Mexfield Housing
Co-operative Ltd
Ratio of Mexfield: where an agreement attempts to grant to an individual a
tenancy terminable only on the occurrence of an uncertain event, ordinary
interpretation does not apply. Instead, s.149(6) LPA converts a tenancy for
life, or an agreement for one, into a lease, or agreement for a lease, for 90
years terminable earlier on the tenant’s death or the events specified in the
agreement. Hence, the agreement must be deemed to be a life tenancy,
subject to earlier determination on the stated event, no matter what the
parties could reasonably be held to have intended.
Rule of certainty in practice
(A) Leases with a fixed maximum duration, determinable upon an uncertain conditional event
This is an easy way to circumvent the rule of certainty. Per Baroness Hale in Mexfield:
“[The certainty rule] could be easily circumvented by granting a lease for (say) 90 years, terminable
earlier than that should the uncertain event happen.”
(B) Periodic tenancies
These are tenancies that go from period to period (e.g. month on month, year to year),
extending/renewing automatically unless either party wants to quit. While this might seem
uncertain because the duration is technically indefinite, the court has held that this is sufficiently
certain.
PQ Note: for there to be a periodic tenancy, both tenant and landlord need to be able to quit by
choice at the end of a tenancy (i.e. there cannot be a fetter on the ability to quit) (Hammersmith v
Monk). As such, if there is any fetter on the ability of either party to quit (e.g. in Mexfield, the
landlord could only quit on breach of certain conditions, it could not just terminate without
reason), there cannot be a periodic tenancy.
The expression ‘term of years’ includes a term for less than a year, or for a
year or years and a fraction of a year or from year to year.
Law of Property Act
1925, s 205(1)(xxvii)
A tenancy from year to year is saved from being uncertain because each
party has power by notice to determine at the end of any year. The term
continues until determined as if both parties made a new agreement at the
end of each year for a new term for the ensuing year.
Prudential
Assurance Co Ltd v
London Residuary
Body
In one sense the term is certain, as it comes to an end when the week, the
month, the quarter or the year for which it has been granted comes to an
end. But that is not the practical reality, as the law assumes a re-letting (or
the extension of the term) at the end of each period, unless one or other of
Berrisford (FC) v
Mexfield Housing
Co-operative Ltd
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the parties gives notice to quit. So the actual maximum term is completely
uncertain. But the theory is that, as long as each party is free to give that
notice whenever they want, the legal maximum remains certain.
Uncertainty is introduced if either party is forbidden to give that notice
except in circumstances which may never arise.
A periodic tenancy can be inferred from the periodic payment of rent. Longrigg Burrough
& Trounson v Smith
A periodic tenancy cannot validly restrict the power of one party to give
notice to quit by tying it to an uncertain future event (as such there cannot
be a periodic tenancy if the agreement is that ‘you can have this room until
you die’)
Centaploy v
Matlodge
Creation of periodic tenancies – can be created by express terms, or it can be inferred from the
express conduct of the parties (e.g. if rent is paid annually):
Adler v Blackman – period is determined by reference of period over which the rent is
calculated
Javad v Aqil – the payment of rent in itself is not sufficient to find a periodic tenancy, such a
finding has to be consistent with the intentions of the parties. Here, an owner let a prospective
tenant into possession while they were still agreeing a formal lease. Negotiations broke down,
tenant argued that he was a periodic tenant and could not be evicted because of the Rent Act.
However, the Court found that he was not a periodic tenant, and that would be inconsistent
with the intentions of the parties (they only intended the tenant to be a tenant once the
formal lease was concluded).
Hammersmith and Fulham LBC v Monk – Periodic tenancies are founded on the continuing will
of both landlord and tenant that the tenancy shall persist. By an omission to give notice of
termination, each party signifies the necessary positive assent to the extension of the term for
a further period.
Ending a periodic tenancy (see further below under ‘termination’)
Notice given by either landlord or tenant (subject to common law and legislative controls, for
which see ‘Termination of leases’ below).
They continue until issued with a notice to quit
Hammersmith and Fulham LBC v Monk [1992] 1 AC 478 (HL)
“[Periodic tenancies are] founded on the continuing will of both landlord and tenant that the
tenancy shall persist.” (Lord Browne-Wilkinson, p 492)
“[B]y his omission to give notice of termination that each party signifies the necessary positive
assent to the extension of the term for a further period.” (Lord Bridge, pp 490-491)
(C) Leases for life and leases until death or marriage / civil partnership
Per the LPA s.149(6):
“Any lease or underlease, at a rent, or in consideration of a fine, for life or lives or for any term of
years determinable with life or lives, or on the marriage of the lessee, or on the formation of a civil
partnership between the lessee and another person … shall take effect as a lease or underlease …
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for a term of ninety years determinable after (as the case may be) the death or marriage of, or the
formation of a civil partnership by the original lessee or the survivor of the original lessees, by at
least one month’s notice in writing.”
This provision was subject to consideration and explanation in Mexfield, per Lord Neuberger:
Step 1: there is a common law rule that an uncertain lease granted to an individual would be
treated as a lease for life
Step 2: since the common law rule converts an uncertain lease into a lease for life, the effect
of s.149(6) LPA is to convert leases for life into leases of 90 year duration, subject to earlier
termination on death or any other terminating event in the agreement.
Hence, any lease which expresses itself to be a lease until marriage/death is turned into a lease for
90 years or marriage/death, whichever is sooner. It is hence certain (as the maximum term will be
90 years).
However, note that the Mexfield workaround will not always work:
(i) The s.149(6) route to the right result can only be followed where the purported tenant is
an individual and not a corporate entity (per Lord Dyson in Mexfield). Because the process
by which the lease is rendered certain involves the common law rule of a lease for life, the
rule cannot apply to companies since companies are, obviously, not alive.
(ii) Formality rules apply (Hardy v Haselden) – there need to be signed writing to create an
equitable lease (s.2 LP(MP)A) or a deed to create a legal lease (s.52(1) LPA)
(iii) Step 1 does not turn an uncertain term into a lease for life where it was clearly not
intended by the parties’ agreement that the ‘tenant’ should enjoy the property for life
(Southward Housing Co-Operative v Walker). As such, there must be an intention of the
parties to create a lifelong lease. There is uncertainty over what constitutes this intention
– in Mexfield, the intention could be said to just be a week to week thing; but on the facts,
it seems like the parties envisioned a long-term relationship, and the parties would not be
surprised if it turned out that the tenant was there for life. PQ Note: if the facts clearly
show that it is meant to be a short-term arrangement, then this would fall within the
Southward exception.
(iv) Doubts were expressed as to the application of Step 1 in cases of periodic tenancies
‘expressed to be not determinable by one side’ in Gilpin v Legg
Note that this requirement of certainty has been heavily criticised:
Lord Browne-Wilkinson in Prudential Assurance – “… no one has been able to point to any
useful purpose that it serves at the present day”
Lord Neuberger in Berrisford – no practical justification for holding that an agreement for a
term of uncertain duration cannot give rise to a tenancy
Baroness Hale in Berrisford – it is always open to the parties to grant a very long term of years,
determinable earlier on the happening of the uncertain event. The law, it would seem, has no
policy objection to such an arrangement, so it is difficult to see what policy objection it can
have to upholding the arrangement to which the parties in fact came.
Lord Clarke in Berrisford – “It seems remarkable to me that it is necessary to decide this
appeal in 2011 by reference to jurisprudence developed over the centuries to the effect that
an agreement for an uncertain term was treated as a tenancy for the life of the tenant,
determinable before the tenant's death according to its terms”
Lord Dyson in Berrisford – “To treat an individual and a corporate entity differently in this
respect can only be explained on historical grounds. The explanation may lie in the realms of
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history, but that hardly provides a compelling justification for maintaining the distinction
today.”
There are also points in favour of retention:
As in Prudential Assurance, leases that go on forever might become very unfair, especially
fixed rate ones. Here, the lease was for £30 a year, by the time the case was brought, it was
worth £10,000 a year.
Is the certainty rule defensible
CRITICISMS OF THE RULE
Defeats the parties’ intentions
Prudential Assurance Co Ltd v London Residuary Body [1992] 2 AC 386 (HL)
[The] bizarre outcome [in this case] results from the application of an ancient and technical rule of
law which requires the maximum duration of a term of years to be ascertainable from the outset.
No one has produced any satisfactory rationale for the genesis of this rule. No one has been able
to point to any useful purpose that it serves at the present day. I … hope that the Law Commission
might look at the subject to see whether there is in fact any good reason now for maintaining a
rule which operates to defeat contractually agreed arrangements between the parties (of which all
successors in title are aware) and which is capable of producing such an extraordinary result as
that in the present case. (Lord Browne-Wilkinson, pp 396-397)
Fact there are ways of ‘saving’ a lease from uncertainty demonstrates the uncertainty rules
serves no practical purpose
Berrisford (FC) v Mexfield Housing Co-operative Ltd [2012] UKSC
“There is no apparent practical justification for holding that an agreement for a term of uncertain
duration cannot give rise to a tenancy.” (Lord Neuberger, [34])
Berrisford (FC) v Mexfield Housing Co-operative Ltd [2012] UKSC
[I]t is always open to the parties to … [grant] a very long term of years, determinable earlier on the
happening of the uncertain event. The law, it would seem, has no policy objection to such an
arrangement, so it is difficult to see what policy objection it can have to upholding the
arrangement to which the parties in fact came. (Baroness Hale, [94])
The ways of ‘saving’ leases from uncertainty are both convoluted, and, in the way they operate,
result in arbitrary distinctions being drawn
Berrisford (FC) v Mexfield Housing Co-operative Ltd [2012] UKSC
“These rules have an Alice in Wonderland quality … we have now reached a position which is
curiouser and curiouser. There is a rule against uncertainty … But this rule does not matter if the
tenant is an individual, because the common law would have automatically turned the uncertain
term into a tenancy for life, provided that the necessary formalities were complied with, before
the Law of Property Act 1925. … (Baroness Hale, [88], [93]-[94])
Berrisford (FC) v Mexfield Housing Co-operative Ltd [2012] UKSC
“It seems remarkable to me that it is necessary to decide this appeal in 2011 by reference to
jurisprudence developed over the centuries to the effect that an agreement for an uncertain term
was treated as a tenancy for the life of the tenant, determinable before the tenant's death
according to its terms. It is a mystery to me why in 2011 the position of a tenant who is a human
being and a tenant which is a company should in this respect be different. There is in my opinion
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much to be said for the view that the certainty rule should now be abandoned.” (Lord Clarke,
[105])
Berrisford (FC) v Mexfield Housing Co-operative Ltd [2012] UKSC 1
“[I]t may legitimately be said that it is not satisfactory in the 21st century to have to adopt this
chain of reasoning in order to arrive at such a result. It is highly technical. There should be no need
to have to resort to such reasoning in order to arrive at the result which the parties intended. That
is why the radical solution of doing away with the uncertainty rule altogether is so attractive. …
There is the further point that the section 149(6) route to the right result can only be followed
where the purported tenant is an individual and not a corporate entity. To treat an individual and a
corporate entity differently in this respect can only be explained on historical grounds. The
explanation may lie in the realms of history, but that hardly provides a compelling justification for
maintaining the distinction today.” (Lord Dyson, [119])
REASONS FOR THE CERTAINTY RULE’S RETENTION
If determining condition never occurs, potential injustice in recognising that the lease continues
into perpetuity
Prudential Assurance Co Ltd v London Residuary Body [1992] 2 AC 386 (HL)
Maintaining doctrinal distinction between leasehold and freehold estates
Low ‘Certainty of Terms and Leases: Curiouser and Curiouser’ (2012) 75 MLR 401
For further discussion of the doctrinal implications of abolishing the certainty rule, see Williams
‘The certainty of term requirement in leases: nothing lasts forever’ [2015 CLJ 592.
RENT
Payment of rent not a necessary element of a lease
Ashburn Anstalt v Arnold [1989] 1 Ch 1
Law of Property Act 1925, s 205(1)(xxvii)
“Term of years absolute’ means a term of years … whether or not at a rent.”
The continuing relevance of rent being payable
The payment of rent still has an important role to play in practice, such as:
(1) Consideration for the lease contract
a. However, not that there are alternative ways in which the tenant might provide
consideration, e.g. payment of an upfront premium/fine; or tenant’s undertaking to
observe leasehold covenants.
(2) Evidence of an intention to create legal relations
a. Vesely v Levy – parties who were friends (no rent was paid) had no intention to create
legal relations, such that there could be no lease despite the existence of exclusive
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(3) (4) possession.
A reason to imply a period tenancy
a. In fact, it is almost inconceivable to imply a periodic tenancy without the payment of
rent, as rent allows the court to determine what the period of a periodic tenancy is.
Access to certain statutory controls
LORD TEMPLEMAN’S THREE EXCEPTIONAL CIRCUMSTANCES, IN WHICH NO LEASE ARISES
NB: there is a query as to whether these exceptions are true exceptions, or rather are
mere manifestations of the ordinary definition of a lease.
(1) (2) (3) No intention to create legal relations (straightforward)
The existence of some other legal relation
Owner has no power to grant tenancy
NO INTENTION TO CREATE LEGAL RELATIONS
Burrows v Brent LBC [1996] 1 WLR 1448 (HL)
‘The right to exclusive possession is referable to a legal relationship other than a tenancy
Street v Mountford [1985] AC 809 (HL)
“Sometimes it may be difficult to discover whether, on the true construction of an
agreement, exclusive possession is conferred. Sometimes it may appear from the
surrounding circumstances that there was no intention to create legal
relationships. Sometimes it may appear from the surrounding circumstances that
the right to exclusive possession is referable to a legal relationship other than a
tenancy. Legal relationships to which the grant of exclusive possession might be
referable and which would or might negative the grant of an estate or interest in
the land include occupancy under a contract for the sale of the land, occupancy
pursuant to a contract of employment or occupancy referable to the holding of an
office.” (Lord Templeman, pp 826-827 (emphasis added))
See also Global 100 Ltd v Laleva [2021] EWCA Civ 1835
‘Where the owner … had no power to grant a tenancy’
Bruton v London & Quadrant Housing Trust [1998] QB 843
The precise scope of the third category is, however, not clear. Is it confined to want of capacity, or
does it extend to want of title? (Millett LJ, p 843)
- Not permitted to grant lease over property by statute
- Does this extend to where landlord does not have a title
Bruton v London & Quadrant Housing Trust [2000] 1 AC 406 (HL)
As a licensee, can you grant a lease over the property
- HL said yes you can
- But how can you grant a lease when a license isn’t proprietary
- Ground floor flat of property built in 1880s
- In 1960-70s there were plans for a comprehensive redevelopment in the whole area
that included knocking down these flats
- Redevelopment never happened
- Lambeth Council bought the flat as part of this redevelopment
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- They were left empty ready for demolition
- This interfered with their social responsibility of offering housing
o But they weren’t in good enough condition
- So then let LQHT take them over for housing – granted a license to them
- LQHT then granted a ‘license’ to Gary Bruton in 1989
- Gary bought an action saying he was actually a tenant
- If it was found that the was a tenant, they would have statutory obligations as a
landlord to repair the flat
- HL was able to discount the label of ‘license’ – it was actually a lease
- But it was merely a lease between Lambeth Council and LQHT
- Able to call on council to repair the property?
- Council decided to terminate the head license and reclaim possession
o Everyone under the LQHT had to leave – In all blocks along the road
o 47 flats – tried to evict everyone – some people took is Strasbourg
o But council did manage to recover the properties
A PROBLEMATIC TYPE OF TENANCY: THE ‘BRUTON TENANCY’
Bruton v London & Quadrant Housing Trust [2000] 1 AC 406 (HL)
Can a ‘lease’ be created by a licensee?
The ‘nemo dat’ problem.
Bruton v London & Quadrant Housing Trust [1998] QB 843 (CA)
“If the grantor has no power to exclude the true owner from possession, he has
no power to grant a legal right to exclusive possession and his grant cannot take
effect as a tenancy.” (Millett LJ, p 845)
Bruton v London & Quadrant Housing Trust [2000] 1 AC 406 (HL)
“[T]he term ‘lease’ or ‘tenancy’ describes a relationship between two parties
who are designated landlord and tenant. It is not concerned with the question of
whether the agreement creates an estate or other proprietary interest which may
be binding upon third parties. A lease may, and usually does, create a proprietary
interest called a leasehold estate or, technically, a ‘term of years absolute’. This
will depend upon whether the landlord had an interest out of which he could
grant it. Nemo dat quod non habet. But it is the fact that the agreement is a lease
which creates the proprietary interest. It is putting the cart before the horse to
say that whether the agreement is a lease depends upon whether it creates a
proprietary interest.” (Lord Hoffmann, p 415)
In Bruton, an owner Council granted a license to LQHT, who then purported to grant a lease to B.
The CA held that on the basis of the nemo dat principle (i.e. you cannot give something you
don’t have), there was no lease. Per Millett LJ: “If the grantor has no power to exclude the true
owner from possession, he has no power to grant a legal right to exclusive possession and his
grant cannot take effect as a tenancy”
However, the Supreme Court disagreed and found that there was in fact a lease:
The term ‘lease’ of ‘tenant’ describes a relationship between two parties who are designated
landlord and tenant. It is not concerned with the question of whether the agreement creates
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an estate or other proprietary interest which may be binding upon third parties. A lease may,
and usually does, create a proprietary interest called a leasehold estate or, technically, a ‘term
of years absolute’. This will depend upon whether the landlord had an interest out of which he
could grant it. Nemo dat quod non habet. But it is the fact that the agreement is a lease which
creates the proprietary interest. It is putting the cart before the horse to say that whether the
agreement is a lease depends upon whether it creates a proprietary interest.
Because Bruton was in exclusive possession, there was hence a lease.
Dixon – says the Bruton decision is wrong – he says there cannot have been a lease but merely a
contractual license
The aftermath of the Bruton decision
Kay v Lambeth LBC [2006] UKHL 10; [2006] 2 AC 465
Kay v United Kingdom (2010) (App No 37341/06); [2011] HLR 2
The court confirmed the personal status of the Bruton tenancy. That is, it reasoned that this
tenancy could have no binding effects beyond the parties to the contract, so that Lambeth
Borough Council could obtain an order for possession against the ‘tenant’ without having to
comply with security of tenure provisions or similar.
What is the nature of the Bruton tenancy?
See generally Gray and Gray, Elements of Land Law (5th ed, 2009), pp 313-315
(1) Non-proprietary lease (this is the position that the SC took; apply this position in a PQ)
a. This was accepted by Lord Hoffmann, which means that whilst the contractual
arrangement between the parties was one of landlord and tenant, this did not
necessarily mean that the tenant had a proprietary interest in the land. This was
based on the very old common law rules which emerged in the medieval period as a
result of which a lease was treated as being a personal right relating to land, not giving
the tenant the right to possession of that land.
(2) A contractual licence
a. Proposed by Dixon, who argues that Hoffmann’s decision was incorrect and there was
a mere contractual licence.
(3) A proprietary lease, explained by the doctrine of relativity of title
a. Per Lord Neuberger in Berrisford: ‘The Bruton case was about relativity of title which is
the traditional bedrock of English land law.’
b. Lambeth had a freehold title, and even though they lacked capacity (via statute) to
grant a lease to London, the facts suggest that LQHT probably had exclusive
possession of the block. If that is right, then its possession generated a relative
freehold estate (i.e. a possessory freehold title), out of which LQHT could carve
Brutfactual pcon’s lease. Bruton’s lease would therefore be proprietary in a relativity
of title sense, and would bind everyone in the world with a lessor title (i.e. everyone
except Lambeth). He had a time-limited right to the exclusive possession of land.
c. On this analysis, Bruton’s title could bind the assignees of London if London’s licence
were assigned, but it could not bind Lambeth or assignees of Lambeth. This
proposition is supported by Goymour, although she accepts that this is not what Lord
Hoffmann thought
Harwood, ‘Leases: Are They Still Not Really Real?’ (2000) 20 LS 503
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Hill ‘The Proprietary Character of Possession’ in E Cooke (ed), Modern Studies in Property Law,
Volume 1 (Hart, 2001), ch 2
Hinojosa, ‘On Property, Leases, Licences, Horses and Carts: Revisiting Bruton v London & Quadrant
Housing Trust’ [2005] Conv 114
Roberts, ‘The Bruton Tenancy: a Matter of Relativity’ [2012] Conv 87
Goymour ‘Bruton v London & Quadrant Housing Trust: Relativity of Title, and the Regulation of the
‘Proprietary Underworld’, ch 7 in Douglas, Hickey and Waring, Landmark Cases in Property Law
(2015)
Smith ‘The Jurisprudence of Lord Hoffmann in Property Law’, in Davies and Pila (eds), The
Jurisprudence of Lord Hoffmann (2015)
But cf Baker ‘Bruton, licensees in possession and a fiction of title’ [2014] Conv 495
Note also ‘Mrockova, ‘The meaning of exclusive possession after Bruton’ [2021] Conv 183, which
argues that a Bruton lease is a lease which involves ‘relative exclusive possession’
OTHER FORMS OF ‘TENANCY’
- Tenancies at will
- Tenancies at sufferance
- Tenancies by estoppel
CREATION OF LEASES
Specifically regarding the transfer of leases:
Note the differences between assignment and sub-leasing (Milmo v Carreras)
o Assignment (i.e. where a tenant disposes of his entire leasehold estate to someone) of
legal leases requires a deed whatever the duration of the lease (LPA s.52; Crago v
Julian) and registration if the lease is already registered (LRA s.27).
If it is an equitable lease, all that is required is signed writing (LPA 1925,
s.53(1)(a))
o Sub-leases (i.e. where a tenant grants a lease over his own leasehold estate for a
shorter amount of time than is remaining on his lease; tenant retains his lease and
there are hence two leases, the head lease and the sub-lease; obligations owed to
original counterparty). Formalities for creating sub-lease are the same as that of a
normal lease.
If the landlord disposes of his estate, the normal priority rules apply. In summary, the lease
will bind the disponee where:
o It is substantively registered (ss.29 and 58 LRA); or
o It is not substantively registered but is protected by a notice on the register (note that
generally leases for a term of three years or less cannot be protected by a notice)
(ss.32-34); or
o It is overriding within Sch.3 Para.1 (generally applicable to legal leases granted for
seven years or less); or
It is overriding within Sch.3 Para.2 (applicable to any proprietary lease where owner of lease is in
discoverable actual occupation).
CREATION:
LEGAL LEASES
- Two formality requirement for legal leases
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o Deed
o Registration requirement
- Don’t need both at same time
Deed requirements
General requirement of a deed
Law of Property Act 1925, s 52
Exception (where no deed required)
Law of Property Act 1925, s 54(2)
There is no requirement of a deed for ‘leases taking effect in possession for a
term not exceeding three years (whether or not the lessee is given power to
extend the term) at the best rent which can be reasonably obtained without
taking a fine.’ These leases can be created orally.
The treatment of periodic tenancies
NB Contracts agreeing to make a lease in the future require signed writing (subject
to the same exception as for the deed requirement): Law of Property
(Miscellaneous Provisions) Act 1989, s 2(1) and (5)(a).
Registration requirements
Land Registration Act 2002, s 27 (1) and (2)
Lease must be substantively registered in all of the following alternative circumstances:
The term is for more than seven years; or
The lease is to take effect in possession more than three months after grant;
or
The right to possession granted by the lease is discontinuous (eg a timeshare)
Land Registration Act 2002, s 38; Sched 2, para 3(2)(b) (leasehold registered with own title, and
notice of lease entered on charges register of landlord’s title)
EQUITABLE LEASES
Where the landlord has an equitable estate
Where the landlord has a legal estate
Parties have failed to make a legal lease, but have entered into a specifically enforceable
contract to grant a lease
Law of Property (Miscellaneous Provisions) Act 1989, s 2(1) and (5)(a)
Walsh v Lonsdale (1882) 21 Ch D 9 (CA)
R v Tower Hamlets LBC, ex p Von Goetz [1999] QB 1019 (CA)
- Council contracted to grant a 10 year lease but failed to grant a deed
- So it wasn’t legal but was granted to be equitable
Lease granted by deed, but is not legal owing to lack of registration
Land Registration Act 2002, s 27 (registered land)
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Is an equitable lease as good as a legal lease?
Equitable lessee always bound by prior interest under priority rules: Land
Registration Act 2002, s 28 (s 29 not triggered)
Equitable lessee cannot benefit from easements implied by Law of Property
Act 1925, s 62
Equitable leases are not overriding interests within Sched 3, para 1, Land
Registration Act 2002 (but may fall within Sched 3, para 2)
DEALINGS WITH THE LEASEHOLD ESTATE: ASSIGNMENT AND SUBLEASING
The difference between assignment and subleasing
Milmo v Carreras [1946] KB 306
- Can only sublet for time that is less than the lease
- Matter of substance not form regarding difference between assignment and sublease
o If assigning for more than time left on lease = assignment
Assignment
Assignment of legal leases
Requirement of deed (whatever the duration)
Law of Property Act 1925, s 52
Crago v Julian [1992] 1 WLR 372 (CA)
Requirement of registration
Land Registration Act 2002, s 27
Assignment of equitable leases
Requirement of signed writing: Law of Property Act 1925, s 53(1)(c)
Subleasing
Formality rules same as for normal leases.
Note that leasehold covenants generally run with an assignment of the lease (not on syllabus)
Landlord and Tenant (Covenants) Act 1995
DEALINGS WITH THE LANDLORD’S REVERSION
Is the landlord’s disponee bound by the lease?
Where the land is registered, the priority rules provided for in the Land Registration Act
2002 apply (refer to Michaelmas Term’s lectures). If the disposition of the landlord’s
estate triggers s 29, the lease binds the disponee where:
It is substantively registered (ss 29 and 58); or
It is not substantively registered but is protected by a notice on the register (note that
generally leases for a term of three years or less cannot be protected by a notice) (ss
32-34); or
It is overriding within Sched 3, para 1 (generally applicable to legal leases granted for
seven years or less); or
It is overriding within Sched 3, para 2 (applicable to any proprietary lease where
owner of lease is in discoverable actual occupation).
Note that if the lease binds the new landlord, the leasehold covenants generally affect the new
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landlord (not on syllabus)
Landlord and Tenant (Covenants) Act 1995
TERMINATION OF LEASES
INTRODUCTION
Protection from Eviction Act 1977, ss.2- 3 – if the property is let as a dwelling, a landlord will
need to obtain a court order to recover possession even if the lease has already come to an
end.
Barrett v Morgan – where there is a subtenancy, if the head lease comes to an end, so too will
any subtenancies. However, there is an exception for situations where the head lease is
terminated by the head tenant surrounding it to the landlord with the landlord’s consent. The
subleases will subsist, and the remaining term is in effect handed back to the landlord.
Possibility of Human Rights challenges under Art.8 ECHR
o Pinnock v Manchester CC – if the landlord has acted in accordance with domestic law,
it will only be in very exceptional circumstances that there is any arguable Art.8
breach.
o McDonald v McDonald – it is very unlikely that a tenant can bring a horizontal claim
(i.e. not against public authorities) under Art.8
Nb coronavirus legislation
NB during the Covid 19 pandemic enhanced restrictions on termination/eviction
by landlords were in place. You are not expected to know these, but if you are
interested, you can find them here.
TERMINATION OF LEASE:
Effluxion of time
Service of notice to quit
Common law notice
Statutory overlay
Where tenancy held by joint tenants
Activation of break clause
Forfeit
Repudiatory breach
Frustration
Merger
Surrender
EFFLUXION OF TIME
o Inherent in the nature of the lease that they end when their term expires
SERVICE OF NOTICE TO QUIT (PERIODIC TENANCIES)
For consideration of human rights compatibility, see McDonald v McDonald [2016] UKSC 28.
o Common law notice requirements in absence of any agreement between
parties – six months’ notice for yearly tenancy, at least one full period’s notice
for all other tenancies (Prudential Assurance)
o For dwellings, there has to be (i) writing containing prescribed information;
and (ii) at least four weeks’ notice (Protection from Eviction Act 1977 s.5(1))
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o Tenancy held by joint tenants – unilateral notice to quit is sufficient
(Hammersmith and Fulham LBC v Monk)
Human Rights arguments on the basis that the rule that a joint
tenancy can be terminated by one party unilaterally violates the other
party’s Art.8 rights.
In Qazi v Harrow, the HL held that the rule was Art.8 compliant.
However, the ECtHR in McCann v UK held that this violated Art.8, and
that there needed to be more procedural protection. However, after
McCann, the SC again held in Sims v Dacorum BC that the rule in
Monk was Art.8 compliant, because it is in the nature of a joint
periodic tenancy that one of the parties can choose to terminate it at
any time.
COMMON LAW NOTICE REQUIREMENTS
Yearly tenancy: six months’ notice
All other tenancies: at least one full period’s notice
Prudential Assurance Co Ltd v London Residuary Body [1992] 2 AC 386 (HL)
STATUTORY OVERLAY
Protection from Eviction Act 1977, s 5(1) (for dwellings, requirement of (i) writing containing
prescribed information; and (ii) at least four weeks’ notice)
WHERE TENANCY HELD BY JOINT TENANTS
- Who can serve notice to quit in a joint tenancy?
Hammersmith and Fulham LBC v Monk [1992] 1 AC 478 (HL)
- Couple broke up, wife left
- Local authoirity said they would rehouse her if she served notice to quit
- She sought unilaterally to terminate periodic tenancy without telling her husband
- Confliction between contractual and proprietary rights
o As a matter of contract law she cannot be held by a tenancy contract without
her continuing consent
o But equally, should she be able to end his property rights
- Said yes, she could
“[In] the case of a yearly tenancy where either the lessor's or the lessee's interest
is held jointly by two or more parties, logic seems to me to dictate the conclusion
that the will of all the joint parties is necessary to the continuance of the interest.”
(Lord Bridge, p 484)
CHALLENGES TO THE OPERATION OF THIS RULE ON HUMAN RIGHTS GROUNDS
Qazi v Harrow LBC [2003] UKHL 43
McCann v Birmingham City Council [2004] EWHC 2156; McCann v UK [2008] HLR 40
Sims v Dacorum BC [2014] UKSC 63
ACTIVATION OF BREAK CLAUSE
A break clause must be included in the lease.
FORFEITURE
Available as a response for breaches of covenants by tenant, provided a ‘right of re-entry’
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has been reserved in the lease. There are statutory restrictions on the landlord’s exercise
of the right of forfeiture, and methods by which the tenant may be granted ‘relief against
forfeiture’. According to the Law Commission, the law on forfeiture is ‘complex, it lacks
coherence, and it can lead to injustice’. Reform has been recommended: Termination of
Tenancies for Tenant Default (Law Com No 303, 2006).
REPUDIATORY BREACH
Hussein v Mehlman [1992] 2 EGLR 87
Chartered Trust plc v Davies (1997) 76 P&CR 296 (CA)
FRUSTRATION
National Carriers Ltd v Panalpina (Northern) Ltd [1981] AC 675 (HL)
Canary Wharf v EMA [2019] EWHC 335 (Ch)
- HC said factually it is hard to make out frustration
- EU medicines agency – leased flats/offices in London
- Tried to say their contract had been frustrated
o HC said it hadn’t
MERGER
SURRENDER
Law of Property Act 1925, s 52(1) (requirement of deed for express surrender)
Barrett v Morgan [2000] 2 AC 264 (HL)
a. Leases can end when a tenant surrenders his estate to his landlord.
b. Where surrender is express, it has to be made by deed (s.52(1) LPA), and surrender is
consensual so the landlord’s consent is required (Barrett v Morgan). Note that this is
distinct from the other methods of termination, because surrender of the headlease
does not terminate any subtenancies.